Has anyone here ever developed high rise condos in Florida, California or elsewhere? Or researched the business?
I am NOT really interested in getting into the business - but after visiting Florida, particularly on the west coast where the market is not so over saturated - I’ve become very interested in learning more about the developers behind those condos.
Please share any information if you have it… =)
Anyone currently investing in condos in FL or CA is losing their shirt. I would suggest throwing your money on the craps table, at least there you MIGHT win something.
Yeap. Rich_in_CT is right. Do you watch this boxy looking thing called TV? Homebuilders and condo developers are losing shirts left and right. 37% drop in new home sale orders.
WOOOHOOO~! I’ve been waiting for this real estate bust for YEARS!
High rise condos are difficult right now. This market has created too many oppurtunities especially if you think big.
To do a high rise you need the pre-sells/reservations to break ground. The key is delivering a product that is not currently on the market that fits a need.
Depending on your financial strength and the strength of your project - most banks will want to see enough reservations to cover 110% of the of the debt and construction and soft costs.
I recently looked at developing a low rise 30 unit luxury building and selling it as fractionals. I think fractionals will be the next big type of ownership in a lot of coastal communities.
The current market in most places can allow you plenty of room to be creative. There are a lot of guys out there grabbing at straws and are being forced to market failing projects hoping to be able to make it work.
A lot of what I do is offer strategies to give some developers/owners an exit strategy on some of these properties.
In closing I agree with the 2 previus posts - ocean front is tough - land/lot development is a lot easier right now
Jason sc
I just read a news article from San Jose (California) Mercury news that a developer is doing urban re-dev… building luxury condo high rise in downtown San Jose, where it was pretty much a shanty town before the real estate boom. These condos are selling between 500k and 2m, and are expected to be completed in 2009.
They have reservations for 100 units so far (for $5k), they say.
I hope these suckers are cow-brained flippers.
In FL, especially now, you need presales not reservations that provide a 20% non-refundable cash deposit. No letter of credit to cover the deposit… cash only. The developer can use the 2nd 10% of the deposit as equity in the construction of the building. In addition, to weed out the “investors or flippers”, the contracts must be non-assignable with a resale clause that the buyer can not list or sell his unit to the open market until the developer has closed out the majority or all of their units 1st.
Jason sc
Fractional Ownership, is one of the hardest real estate products to finance in the industry. You are essentially constructing a spec building and fronting all of the sales costs day one. These projects require significantly more equity than the everyday high-rise condo project.
The future trend is still and will be mixed use projects that include some retail space, office, and residential uses. The municipalities like the concept especially in densely populated areas such as South, FL.